Social security incentives and retirement decisions in Italy: An empirical insight

In the present paper I focus on the measurement of Social Security incentives to early retirement enjoyed by Italian male employees during the late 1980s up to year 2000 and investigate the role played by such incentives and by other socio-economic variables in determining the shape of retirement hazards. Computations, carried out on a panel sample drawn from the SHIW dataset, demonstrate that continuing to work beyond age 60 was strongly discouraged prior to 1990s reforms. Such reforms appear to have especially affected Public Sector workers and younger cohorts. The econometric estimations bring evidence of forward-looking behavior, since individuals do appear to take into account the lifetime path of Social Security incentive changes. Finally, the analysis suggests that such characteristics should be carefully accounted for by any reform aiming at improving the activity rates.